PayForIt, Google's Gpay suggest mobile e-commerce is hot

Two recent activities — the start of PayForIt in the U.K. and Google’s patent application for Gpay — suggest that mobile e-commerce is hot again.

The promise of paying for goods and services with a cell phone, both online and in the real world, has been around for years, especially in Japan and South Korea. But the cell-phone-as-a-digital-wallet concept just hasn’t taken off in the U.K., the U.S., and many other countries for a variety of reasons — paying by a cell phone still remains a clunky user experience and issues of trust and security are just two concerns.

That may be about to change.

PayForIt, which went live Sept. 1, is a process endorsed by the five mobile carriers in the U.K. that standardizes the way cell phones can be used to make payments. The goal is to make the procedure the same no matter which operator a customer has signed up with or which handset is used.

“It’s for those customers who have not felt comfortable with mobile transactions or payments,” Mike Short, chairman of the Mobile Data Association, told the BBC. Short added that PayForIt is not a “total cash replacement” but an “opening up of micro payment choices.”

Customers using PayForIt will see an information screen on their cell phones that presents what was bought, who it was bought from, and for how much. Cash sent by PayForIt is automatically added to a customer’s phone bill. Its use will be limited to transactions under 10 pounds. (See FAQ.)

The industry hopes PayForIt will be used to purchase ring tones, train tickets, parking fees, among other items, and will eventually become a payment system for web shops and sites.

Two cell phone manufacturers, SonyEricsson and Samsung, are among the first to sign up and let people pay using PayForIt. Other companies such as I-play, Gameloft, EA, and Multimap have also signed on

SonyEriccson and Samsung are not the only manufacturers interested in using the cell phone for micro payments. Nokia and Motorola have dabbled in the digital wallet concept arena since the late 1990s. A new company — one that’s not even a mobile handset manufacturer — is also interested in entering the fray and could become the biggest player yet in mobile e-commerce.

Google, the search giant who is rumored to be working on the so-called Gphone, had its patent for Gpay published over the weekend. Gpay is a system where people can purchase goods from a vending machine, pay for a service, or buy other products directly from offline retailers from their handsets (TimesOnline report).

The user (payor) sends an SMS text message to the Gpay servers, which debits the user’s account and sends the merchant (payee) credit for the purchase.

Duncan Riley of TechCrunch has even speculated that Gpay could end up being offered exclusively through the Gphone, which would give Google, which already runs an online payments system called Checkout, the jump over other mobile operators and payment solutions. PayPal and Obopay currently offer mobile payment options, but neither has taken off like PayForIt and Gpay might.

last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.